Tiruchirapalli

Declining admissions, mounting loans

Private engineering colleges caught in existential crisis

Bank loans obtained by private engineering colleges in the region are turning into non-performing assets due to continuous decline in admissions in recent years.

“Repayment capacity of the colleges has taken a hit due to the trend of increasing number of students opting for higher studies in non-engineering fields,” says P. Selvaraj, secretary, Consortium of Self-Financing Engineering Colleges in Tamil Nadu.

Although the institutions intend to transform themselves into arts and science colleges, the process is fraught with complications. “This method does not seem to be practical,” Mr. Selvaraj, who is also founder chairman of Shivani Group of Institutions, points out.

But some have set the ball rolling. For instance, the management of an engineering college along Namakkal Road wound up operations and converted the institution into a school after obtaining a no-objection certificate from All India Council for Technical Education (AICTE) and completing the formalities prescribed by the School Education Department.

But this will not work out in all places, particularly in rural areas. Setting up schools every few km does not make economic sense, he contends.

What is more, the trend of below-average engineering students migrating en masse to deemed-to-be universities for completion of fourth year has made matters worse. Those unable to clear arrears are taking transfer certificates following increase in academic rigour put in place by Anna University.

Under the new system, only those who do not have arrears in the first semester will be allowed to study fourth year.

“Some of the deemed-to-be-universities admit students in the final year for a hefty fee and facilitate them to complete their engineering degrees at the end of fourth year. We have complained about this trend, but the State government seems to have little say over the functioning of deemed-to-be universities. We have approached AICTE,” Mr. Selvaraj says.

Barring a handful of engineering colleges, the rest face loan repayment problems in Tiruchi district. The managements are learnt to have approached the banks, seeking a moratorium on repayment.

“NPA guidelines being common for all banks, the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act will have to be invoked to recover loans,” a senior bank official says.

The maximum that the banks can do at this juncture is restructuring of loans on a case-to-case basis, the official adds.

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Jul 2, 2020 10:27:09 PM | https://www.thehindu.com/news/cities/Tiruchirapalli/declining-admissions-mounting-loans/article30932233.ece

Next Story